After suffering a loss equivalent to over half of its total assets due to the failure of FTX, one of the world’s biggest cryptocurrency hedge funds, Galois Capital, has announced that it will be closing its doors.
When the Financial Times published an article on the closure of the fund, the company sent out a tweet confirming the news. The failure of FTX in November 2022 caused shockwaves to spread across the cryptocurrency industry.
FTX and its affiliated companies, which are nearly one hundred and thirty companies, filed for bankruptcy protection, including West Realm Shires Services and Alameda Research, filing for insolvency under Chapter 11 of the US Bankruptcy Code.
The bankruptcy petition disclosed that FTX owes close to $3 billion to 50 of its top creditors, all of whom were clients of the company.
Galois Capital, founded by Kevin Zhou and Ken Xu, was one of the high-profile victims of the FTX implosion. Half of the $200 million dollars worth of assets it managed last year were left trapped on the exchange when it collapsed.
In November 2022, Zhou informed investors that it would take a few years to recover “some percentage” of the $40 million that was stuck at FTX.
He promised to work tirelessly to maximize the chances of recovering the funds, but the situation didn’t improve. In January, CoinDesk reported that FTX claims were going for around 13 cents on the dollar on the bankruptcy marketplace Xclaim.
Galois Capital confirms the closure
Zhou announced the closure of the fund in a letter to investors in which he wrote that given the gravity of the FTX crisis, they do not believe it is tenable to continue running the fund both financially and culturally.
His statement was included in the letter. He continued by saying that he is, once again, very sorry for the predicament that they find themselves in at the moment.
It was verified by the hedge fund that it had closed down all of its trading activities and sold off all of its holdings due to the fact that it was no longer sustainable. Galois Capital has it in its plans to give back any unspent money to the investors.
Galois Capital’s plan
The hedge fund has promised that it would refund 90% of the money that isn’t trapped at FTX to its clients, with the remaining 10% of the money being kept on hold until all conversations are concluded.
These setbacks are temporary and will come to pass. However, I, even now, remain hopeful for crypto’s long-term future.
While the recent developments have dealt a significant blow to the industry, experts say that the future of crypto remains promising.
As it is possible that additional funds may have similar issues as the crypto sector develops, it is crucial that investors thoroughly consider the risks before investing.
Nevertheless, the resilience of the industry and the growing interest from traditional finance players suggest that crypto is here to stay.